Responding to the government’s latest Solvency II consultation

Matthew Francis, insurance director at KPMG UK, said: “These reforms present a once-in-a-generation opportunity to construct a regulatory regime which is better tailored to the UK insurance market.

“Insurers will want to study the details of the proposals carefully, particularly in respect to how the fundamental spread proposals partially offset the redesign of the risk margin and translate into the 10-15% reduction in capital for the life insurance industry.

“Insurers will also want to consider how they can deploy released capital and how to utilise their balance sheets. These reforms could affect the types and pricing of the insurance products that they offer as well as the types of assets that they hold in their investment portfolios.

“Whatever the final calibration of these reforms, this will be the biggest set of changes for a decade and firms and boards will want to be confident that they have got them right.”

ENDS.

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About KPMG:

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 15,300 partners and staff.  The UK firm recorded a revenue of £2.43 billion in the year ended 30 September 2021.

KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 145 countries and territories with more than 236,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.